High-Skilled Immigration Flows to Metro Areas

7.26.12 | Immigration is a tense topic these days. Arizona sheriff Joe Arpaio is in the hotseat for racial profiling in Maricopa County. President Obama bypassed Congress and signed the Dream Act, signaling the opening bell of the campaign debate on the topic. And as the recession grinds on (despite NBER’s insistence otherwise), the spotlight is turned on immigrant labor, with many arguing that they are “taking jobs from Americans.” The topic is such a flashpoint that it unfortunately rarely moves beyond hyperbole. What is often overlooked in the debate is that U.S. businesses often clamor for immigrants, both low-skilled and high, as a recent Brookings report underscores.

Agriculture, for example, needs workers to pick grapes in the short window when the sugar is at its peak for raisins or cherries in the similarly short ripeness window. To bring in these guest workers, they rely on the H-2A visa. On the higher-skilled end, U.S. businesses need engineers and scientists and workers in high-skilled manufacturing, which is the focus of the latest Brookings report. The report, The Search for Skills, by Neil G. Ruiz, Jill H. Wilson, and Shyamali Choudhury, focuses on the “H-1B” visa holders, who as the report notes are largely Indian and Chinese.

For the first time in 40 years, new Asian arrivals exceed Latinos, according to a talk I sat in on last week by Jeffrey Passel at the Pew Hispanic Center. The net flow of Mexican immigrants, on the other hand, has stalled, beginning about five years ago with the onset of the recession. There are, in other words, as many returns to Mexico as their are departures (and the returns predate state legal changes such as SB 1070 in Arizona).

As the Brookings report notes, about two-thirds of the H-1B visa recipients come from India and China, with India representing a majority of all visa recipients. Other countries represented include Canada, the United Kingdom, South Korea, and the Philippines, as Neil Ruiz, the coauthor of the Brookings report, told the audience at the release of the report.

These high-skilled workers must have at least a BA and the employer must not lay off American workers to employ the foreign-born worker. Employers are also required to pay the average wage (or higher) for the occupation and local area. In addition, employers are forbidden to pay H-1B workers less than they pay other workers with similar skills and qualifications.

Currently, employers who want to hire an H-1B worker are not required to perform labor market tests to ensure there are no available American workers, but only attest that no American worker has been displaced at their company as a result. This oversight process facilitates speedy H-1B approvals but relies on post-admission site visits to detect fraud and abuse.

Most of these high-skilled workers are landing in metro areas. As Ruiz said, “Metros—both large and small—are at the forefront of demand in the H-1B visa program.”

But not all of these metros are the “usual suspects” such as San Jose. As Catherine Rampell reported in the Economix blog,

Although our research shows that San Jose, Calif., home to Silicon Valley, is the No. 1 metropolitan area in demand for H-1B workers relative to its work force size, Columbus, Ind., [pop. 75,000] ranks second.

This is driven mostly by Cummins Inc., an advanced manufacturer specializing in clean technologies for automotive engines headquartered there. The company has experienced exponential growth over the past several years, even during the recession, and most of its requests for H-1B workers are for engineers.

Other metro areas in the Midwest have a high demand for STEM H-1B workers. For instance, in Bloomington, Ill.,94.8 percent of all H-1B requests are for STEM occupations, the highest share of all metro areas in the country. These are driven by companies like Patni Americas Inc., which provides information-technology services for State Farm.

Columbus, Ind., ranks second for STEM share (88.8 percent) and No. 3 is Peoria, Ill., where the heavy equipment maker Caterpillar is headquartered. Midwestern metros like these are looking to the H-1B visa program to build a skilled labor force.

In all, 106 metro areas had at least 250 requests for H-1B workers in the 2010–2011 period, accounting for 91% of all requests but only 67% of the national workforce.

Certain metro areas are scrambling to find workers to fill the types of high-skilled jobs they’re offering, even in an enduring recession. Some say this is just a case of employers being overly picky, saying that they simply cannot find the skilled workforce on our shores.

Recognizing the need to bolster STEM education and workforce training, part of the money from visa fees–$628 million– goes toward training an American workforce. But that too has problems, according to Ruiz.

Ideally, many of these skills employers seek from abroad would already exist in the metropolitan workforce. Unfortunately, visa fees are not currently targeted to address the longer-run skills needs implied by the geography of H-1B demand.

Collectively, the 106 high-demand H-1B metros received only $3.09 per capita in skills training funds from 2001 to 2011. Other metros with far fewer H-1B requests, by contrast, received $15.26 per capita for technical skills training.

Indeed, the four metro areas featured earlier have a high demand for H-1B workers but received a very small portion of these funds, if any at all.

The bottom line is, H-1B supported workforce training does not match H-1B workforce demand at the regional scale.

Ruiz recommends better targeting of training dollars to those metros–and their unique needs. He points to Witchita, Kansas, as a model. The Kansas Engineering Excellence Project (KEEP), in which private employers in the area work with the local university to help students complete advanced degrees with skills matched to aviation and aerospace.

Another aspect of immigration is the impact it has on metro areas, particularly smaller ones like Peoria, Illinois, or Columbus, Indiana. A recent New York Times Magazine article on Postville, Iowa, shows the ups and downs of immigration’s impact on a small town. But the impact can be similar in smaller cities, without good planning.

A chapter in Urban and Regional Policy and Its Effects (volume 4) by BRR Network members Manuel Pastor and John Mollenkopf examine how six metro areas have adapted, successfully and less so, to an influx of new populations. They find that a region’s history with immigration contributes to a resilient response and if the immigrant population is from diverse groups, regions often respond in a more resilient fashion. They also find that creating a wedge issue for political expediency never helps.